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v.
JURY TRIAL DEMANDED
ALLIANCE MMA, INC., PAUL K.
DANNER, III, and JOHN PRICE,
Defendants.
This action is brought against Defendants Alliance MMA, Inc. (Alliance MMA or the
Company), Paul K. Danner, III, and John Price (collectively, the Defendants). Plaintiff
Darren Shulman (Plaintiff), individually and on behalf of all other persons similarly situated, by
his undersigned attorneys, for his complaint against Defendants, alleges the following based upon
personal knowledge as to himself and his own acts, and information and belief as to all other
matters, based upon, inter alia, the the investigation of counsel, which included a review of United
States Securities and Exchange Commission (SEC) filings by Alliance MMA, as well as
regulatory filings and reports, securities analyst reports and advisories by the Company, press
releases and other public statements issued by the Company, and media reports about the
Company. Plaintiff believes that additional evidentiary support will exist for the allegations set
1. This is a federal securities class action on behalf of a class consisting of all persons
and entities other than Defendants who purchased or otherwise acquired the publicly traded
Case 1:17-cv-03282-RJS Document 1 Filed 05/03/17 Page 2 of 13
securities of Alliance pursuant and/or traceable to the Companys initial public offering on or about
October 6, 2016 (the IPO), seeking to recover compensable damages caused by Defendants
2. This action is brought on behalf of the Class for violations of Sections 11 and 15 of
the Securities Act of 1933 (the Securities Act), 15 U.S.C. 77k and 77o.
3. Pursuant to the Securities Act, Defendants are strictly liable for material
misstatements in the Offering Materials issued in connection with the IPO. The Securities Act
claims specifically exclude any allegations of fraud, knowledge, recklessness or scienter, do not
4. The federal law claims asserted herein arise under 11 and 15 of the Securities
5. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
1331 and 22 of the Securities Act, 15 U.S.C. 77v. In connection with the acts, conduct and
other wrongs alleged herein, Defendants, directly or indirectly, used the means and
communications, and the facilities of the NASDAQ (a national securities exchange located in this
District).
Securities Act because the Companys headquarters are located in this District
PARTIES
7. Plaintiff purchased Alliance MMA securities as set forth herein and in his
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located at 590 Madison Avenue, 21st Floor, New York, New York 10022. Alliance MMAs
common stock trades on the NASDAQ under the ticker symbol AMMA.
9. Defendant Paul K. Danner, III (Danner) has been the Companys Chief Executive
10. Defendant John Price (Price) has been the Companys Chief Financial Officer
11. Defendants in Paragraphs 9-10 are collectively referred to herein as the Individual
Defendants.
highest levels;
herein;
e) was aware of or deliberately recklessly disregarded the fact that the false
and/or
laws.
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13. Alliance is liable for the acts of the Individual Defendants and its employees under
the doctrine of respondeat superior and common law principles of agency because all of the
wrongful acts complained of herein were carried out within the scope of their employment.
by reference, contained materially untrue and misleading statements and/or omissions. Defendants
negligently allowed the Prospectus to contain materially untrue and misleading statements and/or
omissions to the extent that they knew or should have known that the Prospectus was materially
misleading, but failed to act in a reasonable manner to prevent the Prospectus from containing
materially misleading statements and/or preventing the materially misleading Prospectus from
being disseminated. These claims, brought under Sections 11 and 15 of the Securities Act, 15
U.S.C. 77k and 77o, are based solely on claims of strict liability and/or the absence of any
affirmative defense based on the reasonableness of the pertinent Defendants investigation into the
true facts. These claims are not based on any allegation of fraud, intentional wrongdoing, or severe
recklessness.
SUBSTANTIVE ALLEGATIONS
I. Company Background
15. Alliance MMA was formed on February 12, 2015 to acquire companies in the
mixed martial arts (MMA) industry. The Company aims to create a highly organized feeder
organization to the sports highest level of professional competition including The Ultimate
Fighting Championship (UFC), Bellator MMA, World Series of Fighting and other prestigious
16. On August 16, 2016, the Company filed a registration statement on Form S-1 with
the SEC. The registration statement was subsequently amended, with the final amended
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registration statement on Form S-1/A filed on August 30, 2016 (collectively, the Registration
Statement). The Registration Statement was declared effected by the SEC on September 2, 2016.
17. On September 30, 2016, the Alliance MMA acquired the assets and assumed
certain liabilities of six companies. Additionally, the Company acquired a seventh company. The
seven companies consisted of five regional MMA promotion companies, a live MMA video
promotion and content distribution company, and an electronic ticketing platform serving MMA
18. On or about October 6, 2016, the Company completed its IPO that consisted of a
public sale of a 2,222,308 shares of the Companys common stock at $4.50 per share.
19. The Registration Statement, signed by Defendants Danner and Price, provided the
Companys financial statements for the three and six months ended June 30, 2016, including the
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20. The Registration Statement further provided the Companys financial statements
for the six months ended June 30, 2016, including the following balance sheet:
21. The Registration Statement also provided the Companys financial statements for
the six months ended June 30, 2016, including the following statement of operations:
22. The Registration Statement provided the Companys financial statements for the
six months ended June 30, 2016, including the following statements of cash flow:
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23. The statements in paragraphs 19-22 above were materially false and/or misleading
because they misrepresented and failed to disclose the following adverse facts pertaining to the
Companys business, operations and prospects, which were known to Defendants or recklessly
disregarded by them. Specifically, Defendants made false and/or misleading statements and/or
failed to disclose that: (1) the condensed consolidated financial statements for the three months
ended June 30, 2016 could not be relied upon because of an error in recognizing as compensation
transfers of common stock by an affiliate of the Company to individuals who were at the time of
transfer, or subsequently became, officers, directors or consultants of the Company; (2) the
condensed consolidated financial statements for the six months ended June 30, 2016 could not be
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affiliate of the Company to individuals who were at the time of transfer, or subsequently became,
officers, directors or consultants of the Company; and (3) as a result, Defendants statements
Companys growth in media placement revenues would not occur in the fourth fiscal quarter 2016;
(iv) as a result of the foregoing, the Companys statements, as well as Defendants statements
about the Companys business, operations, and prospects, were false and misleading and/or lacked
with the SEC announcing the Companys financials for the nine months ended September 30, 2016
included in the Companys Form 10-Q for the quarter ended September 30, 2016 and for the three
and six months ended June 30, 2016 should no longer be relied upon (April 12, 2017 Form 8-
On April 7, 2017, the Board of Directors of Alliance MMA, Inc. (the Company)
concluded that the condensed consolidated financial statements for the nine months
ended September 30, 2016 included in the Companys Form 10-Q for the quarter
ended September 30, 2016 and for the three and six months ended June 30, 2016
should no longer be relied upon because of an error in recognizing as compensation
transfers of common stock by an affiliate of the Company to individuals who were
at the time of transfer, or subsequently became, officers, directors or consultants of
the Company. The Company plans to include in its annual report on Form 10-K for
the year ended December 31, 2016 revised financial information for the nine
months ended September 30, 2016 and for the three and six months ended June 30,
2016. The Companys chief financial officer has discussed the determination to
restate these financial statements with its independent accounting firm.
25. On Shares of Alliance have plummeted since the IPO and currently trade around
26. 29. As a result of Defendants wrongful acts and omissions, and the precipitous
decline in the market value of the Companys securities, Plaintiff and other Class members have
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27. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules
of Civil Procedure on behalf of all persons who purchased or otherwise acquired the Companys
common stock pursuant or traceable to the Registration Statement issued in connection with the
IPO (the Class). Excluded from the Class are Defendants and their families, the officers and
directors of the Company, at all relevant times, members of their immediate families and their
legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had
a controlling interest.
28. The members of the Class are so numerous that joinder of all members is
impracticable. Throughout the Class Period, Alliance MMA common stock was actively traded on
the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this time and
can be ascertained only through appropriate discovery, Plaintiff believes that there are hundreds
or thousands of members in the proposed Class. Record owners and other members of the Class
may be identified from records maintained by Alliance MMA or its transfer agent and may be
notified of the pendency of this action by mail, using the form of notice similar to that customarily
used in securities class actions. Upon information and belief, these shares are held by hundreds if
not thousands of individuals located geographically throughout the country and possibly the world.
29. Plaintiffs claims are typical of the claims of the members of the Class as all
members of the Class are similarly affected by the defendants respective wrongful conduct in
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30. Plaintiff has and will continue to fairly and adequately protect the interests of the
members of the Class and have retained counsel competent and experienced in class and securities
litigation. Plaintiff has no interests antagonistic to or in conflict with those of the Class.
31. There is a well-defined community of interest in the questions of law and fact
involved in this case. Questions of law and fact common to the members of the Class which
predominate over questions which may affect individual Class members, including:
stated therein;
(c) To what extent the members of the Class have sustained damages and the
32. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the
damages suffered by individual Class members may be relatively small, the expense and burden
of individual litigation make it impossible for members of the Class to individually redress the
wrongs done to them. There will be no difficulty in the management of this action as a class action.
COUNT I
For Violation of Section 11 of the Securities Act
(Against All Defendants)
33. Plaintiff incorporates by reference each and every preceding paragraph as though
34. This Count is asserted by Plaintiff on behalf of themselves and the Class against all
the Defendants and is based upon Section 11 of the Securities Act, 15 U.S.C. 77k.
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35. The Registration Statement was inaccurate and misleading, contained untrue
statements of material facts, omitted to state other facts necessary to make the statements made
not misleading, and omitted to state material facts required to be stated therein.
36. None of the defendants named herein made a reasonable investigation or possessed
reasonable grounds for the belief that the statements contained in the Registration Statement were
true and without omission of any material facts and were not misleading.
37. By reason of the conduct herein alleged, each defendant violated 11 of the
Securities Act.
38. Plaintiff acquired the Companys stock pursuant and/or traceable to the IPO.
39. Plaintiff and the Class have sustained damages. The value of the Companys
common stock has declined substantially subsequent to and due to defendants violations.
40. At the time of their purchases of the Companys common stock, plaintiff and other
members of the Class were without knowledge of the facts concerning the wrongful conduct
alleged herein and could not have reasonably discovered those facts prior to the disclosures herein.
Less than one year has elapsed from the time that plaintiff discovered or reasonably could have
discovered the fact upon which this Complaint is based to the time that plaintiff commenced this
action. Less than three years has elapsed between the time that the securities upon which this Count
is brought were offered to the public and the time plaintiff commenced this action.
41. By reason of the foregoing, Plaintiff and the other members of the Class are entitled
to damages as measured by the provisions of Section 11(e), 15 U.S.C. 77K(e), from the Defendants
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COUNT II
For Violation of Section 15 of the Securities Act
(Against the Individual Defendants)
42. Plaintiff incorporates by reference and realleges each and every allegation above as
43. This Count is brought pursuant to 15 of the Securities Act against the Individual
Defendants.
44. The Individual Defendants each were control persons of the Company by virtue of
45. The Individual Defendants were each culpable participants in the violation of 11
of the Securities Act, alleged in Count I above, based on their having signed or authorized the
signing of the Registration Statement and having otherwise participated in the process that allowed
reasonable grounds for the belief that the statements contained in the Prospectus and Registration
Statement were accurate complete in all material respects. Had they exercised reasonable care,
they could have known of the material misstatements and omissions alleged herein.
47. This claim was brought within one year after the discovery of the untrue statements
and omissions in the Prospectus and Registration Statement and within three years after the
Companys securities were sold to the Class in connection with the IPO. It is therefore timely.
48. By reason of the above conduct, for which the Companys is primarily liable, as set
forth above, the Individual Defendants are jointly and severally liable with and to the same extent
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(A) Declaring this action to be a class action pursuant to Rule 23 of the Federal Rules
of Civil Procedure and certifying Plaintiff as a representative of the Class and her counsel as Class
counsel;
(B) Awarding damages in favor of plaintiff and the Class against all defendants,
(C) Awarding Plaintiff and the Class their reasonable costs and expenses
(E) Awarding such equitable/injunctive or other relief as the Court may deem
JURY DEMAND
Nicholas I. Porritt
Adam M. Apton
30 Broad Street
24th Floor
New York, New York 10004
Tel.: (212) 363-7500
Fax: (212) 363-7171
Email: nporritt@zlk.com
Email: aapton@zlk.com
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